INSTITUTE –University School of
Business
DEPARTMENT -Management
M.B.A
Logistics & Supply Chain Management 23BAT-623
Lecture – Single Stage Inventory Control
UNIT-2: Supply
DISCOVER . LEARN . EMPOWER
Chain Integration
and Procurement
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Single Stage Inventory Control
Course Objective Course Outcome
CO Title Level CO Title Level
Number Number
CO1 At the completion of this course, the Understand CO1 Design competition strategies, Understand
student should be able to including costing, pricing, product
understand the concepts related to differentiation, and market
SCM. . environment according to the
CO2 Students will be able to design and natures of products and the
Apply
study performance of supply structures of the markets.
networks and processes in different
business contexts CO2 Understand the links between Apply
production costs and the economic
models of supply. 2
CO3 To understand the global supply Analyze CO3 Understand how different degrees of Analyze
chains & risks thereof competition in a market affect pricing
and output
Single Stage Inventory Control
Source : [Link]
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Inventory
Control
What is Inventory Control?
Inventory control refers to the process of effectively managing
consumable stock items, parts or supplies.
Inventory control helps streamline stockroom, supply depot, and
small warehouse operations, and it provides item-level visibility so
that you know what you have, where it is, and when to order more.
Basic Problem in Inventory Control
• High cost of inventory.
• Consistent stockouts.
• High amount of obsolete inventory.
• High amount of working capital.
• High cost of storage.
• Spreadsheet data-entry errors.
• Lost customers.
Classical Inventory Control System
Single Stage and Two Stage Inventory Control
• Single-inventory optimization is a type of supply planning in which supply at each location
is optimized independently of each other. This type of approach works for smaller
companies that are composed of less complex supply chain networks with fewer points of
distribution from the point-of-origin to the end-point, the consumer.
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Multistage Inventory Control
• stock across all locations in a supply chain network. New inventory shipments are first
stored at a central or regional distribution centre (RDC). These central facilities function as
the internal suppliers to the customer-facing outlets.
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Economic Lot
Size
Economic Order Quantity (EOQ)
Economic Order Quantity (EOQ) is used to
determine the optimal number of units to order so
that we minimize the total cost associated with the
purchase, delivery and storage of the product.
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Purchase
Material Cost
Ordering cost Carrying cost
Purchase cost
(Variable (Variable
(Fixed Cost)
Cost) cost)
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Assumptions of EOQ Model
Demand is known, constant, and independent
Lead time is known and constant
Order quantity received is instantaneous and Complete
No shortage is allowed
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Inventory Order Cycle
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EOQ Cost Model
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EOQ Cost Model
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Limitations of Using EOQ
The EOQ formula assumes that consumer demand is constant.
The calculation also assumes that both ordering and holding costs
remain constant.
This fact makes it difficult or impossible for the formula to account
for business events such as changing consumer demand, seasonal
changes in inventory costs, lost sales revenue due to inventory
shortages, or purchase discounts a company might realize for buying
inventory in larger quantities.
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Resources
1. Essentials of Supply Chain Management (Essentials
Series) Paperback – Import, 12 August 2011 by Michael
H. Hugo
2. Principles and Practice of Supply Chain
Management Hardcover – Import, 3 June 2019
By Judy Dickens
3. Supply chain design and management: Strategic and
tactical perspectives by Manish Govil and Jean-Marie
Proth
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Homework
What is the EOQ Model? Explain in detail.
What is the single Stage Inventory Control Explain ?
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Blackboard
Assessment Pattern
Components HT-1 HT-2 Assignment Surprise Business GD Forum Attendance Scaled
Test Quiz Marks
Max. Marks 10 10 6 4 4 4 2 40
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THANK YOU
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